The state Auditor’s Office said it turned over documents to the U.S. Department of Justice Thursday, three days after federal agents conducted a search of State Auditor Troy Kelley’s Tacoma home.
The documents were provided in response to a federal subpoena, which was served on the Auditor’s Office March 6, agency spokesman Thomas Shapley said.
Shapley said Thursday he had not seen the subpoena and couldn’t say precisely which documents the federal government had requested. The auditor’s office gave the records to the Department of Justice at about noon, he said.
The state Attorney General’s Office wouldn’t release a copy of the subpoena Thursday, saying officials were still reviewing whether the document is disclosable under the state Public Records Act.
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As of late Thursday morning, Kelley was still on vacation with his family, and had not indicated he planned to return to work before Monday, according to his office. Shapley said that he believes Kelley is in California. Kelley did not respond to a message left on his cellphone Thursday evening.
A spokeswoman for the Tacoma police said agents clad in bulletproof vests spent five hours at Kelley’s home Monday after serving a search warrant there. According to information obtained by The News Tribune, the agents at Kelley’s home were from the U.S. Treasury Department.
In an email statement sent to The News Tribune and The Olympian on Wednesday night, Kelley said he has been out of the state since Friday and has not been told why his house was searched.
“We were not there when our home was reportedly searched and have not yet returned,” he said. “I have not been served a search warrant and have not been informed of any reasons for a search.”
Emily Langlie, spokeswoman for the U.S. Attorney’s office in Seattle, said Thursday that her agency could not confirm or deny any investigation involving Kelley, noting no charges against him have been filed.
A spokeswoman for Gov. Jay Inslee said the governor’s office was unaware of any federal inquiry regarding Kelley before seeing news reports Wednesday of his home being searched.
Kelley, 50, is a Democrat and lieutenant colonel in the National Guard who was elected to the auditor’s office in 2012. His current annual salary is $116,950. Before that, he served three terms in the state House.
Following news that the Justice Department had subpoenaed records from Kelley’s office, the leader of the Washington State Republican Party on Thursday asked Kelley to step down, or that Inslee demand his resignation.
“As State Auditor, Kelley is responsible for finding and preventing waste, fraud, and abuse in state government,” Republican chairwoman Susan Hutchison said in a statement. “The position requires the highest standards of honesty and integrity.”
Jaime Smith, a spokeswoman for Inslee, said Thursday that such discussions were premature.
Still, former auditor Brian Sonntag said he thinks the public would like to hear “a little more open discussion” from Kelley about why he is being investigated – especially given that the auditor’s job is to identify fraud and hold other government agencies accountable. Sonntag, a Democrat, served as auditor for two decades before retiring in 2012.
“Being that public watchdog, the public’s auditor, that’s a high calling,” Sonntag said. “I think the questions are legitimate and people are going to want answers.”
Senate Majority Leader Mark Schoesler, R-Ritzville, said it may be too early to demand Kelley’s resignation, but that he thinks Kelley should consider stepping down temporarily.
“The facts as I know them are very limited, and also very troubling,” Schoesler said. “I think he should consider at the very least taking a leave of absence so he isn’t impeding any investigation.”
State archivist Steve Excell said he did not know of another instance in which federal agents have searched a statewide elected official's residence or office.
The last federal investigation to target a prominent Washington state official appears to be the 20-month FBI undercover investigation called "Gamscam" that led in 1980 to a federal racketeering indictment against former House Speaker John Bagnariol and Senate Majority Leader Gordon Walgren.
Before his election to auditor, Kelley was embroiled in an acrimonious federal lawsuit concerning his business that processed and tracked mortgage title documents. The lawsuit ended in 2011 when he paid an undisclosed settlement to his company’s former client, Old Republic Title.
Old Republic had contended Kelley kept $1.2 million in fees that should have been refunded to Old Republic’s customers. Kelley later told reporters he collected fees properly for work he did. In the suit, Kelley answered questions under oath about why he had moved $3.8 million among multiple bank accounts, and whether he paid taxes on that money.
Kelley said he would pay taxes when told to do so by an attorney advising him. Kelley identified the attorney as Alan Eber, the name of a California lawyer who specialized in helping clients protect their assets by creating international trusts.
Prior to starting his own company, Kelley worked as an executive for First American Title Insurance Co. He sued the company for wrongful termination and defamation after it fired him in 2000. He complained that one company official had told other managers that he was stealing and embezzling from the company.
The company accused him of later breaking into its offices and stealing a painting, an act it said was captured on surveillance footage. Kelley denied the allegation, but shortly after the footage was submitted, he dismissed his lawsuit.